Car finance problems can come in all shapes and forms and can cause a variety of headaches. Being aware of some of the problems may help you avoid them.
The first and most common of all car finance problems is a poor credit rating. A poor credit rating may determine whether you are able to get financing for a vehicle or not. Those with a poor credit score are considered high risk to lenders and have to pay more for their loan.
A low credit score leads to the next of the car finance problems, which is having to pay high interest rates on your loan. High interest rates along with additional loan fees are indicative of a poor credit rating. High interest rates can cost you hundreds if not thousands over the life of your car loan.
Maintaining a positive credit score can alleviate this car finance problem. There are things you can do reasonably quickly to increase your credit rating. Do what you can to learn how to repair your credit and increase your credit score.
The next reason for car finance problems is what they call a negative equity car loan. Another term you may hear is an upside down car loan. This means that the balance due on the loan is greater than the value of the vehicle. These types of auto finance problems can feel like a black hole with no way out.
In these times, upside down loans are common and typically come from the longer loan terms and quick depreciation of a vehicle. A possible way out of this type of auto finance problem is a savings account. Do all you can to set some money aside in a savings account to help cushion the difference between what you owe on the car and its current value. You can also make extra payments every month on your loan to help off set your negative equity.
Another one of the car finance problems is the insurance premiums. If you have an auto loan you will be required to have the car covered by full insurance. If you have a poor credit rating you will most likely be charged higher insurance premiums.
Insurance companies pull your credit report and charge you more for insurance if you have bad credit. This is because reports show that people with poor credit ratings report more accidents than those with higher credit scores.
Another problem comes from making late payments on your auto loan. Being late on a payment can lower your credit score by 80 to 120 points. Having late car payments on your credit history can make it more difficult to buy another car when you need one. If you are overwhelmed with car finance troubles you may begin falling behind on the payments. This could cause the bank to repossess your vehicle leaving you with no wheels and a black mark on your credit report.
Address these problems as soon as they come up in your life so they don't get out of hand and cause you more headache and problems in the future.
By Mike Reitz
The first and most common of all car finance problems is a poor credit rating. A poor credit rating may determine whether you are able to get financing for a vehicle or not. Those with a poor credit score are considered high risk to lenders and have to pay more for their loan.
A low credit score leads to the next of the car finance problems, which is having to pay high interest rates on your loan. High interest rates along with additional loan fees are indicative of a poor credit rating. High interest rates can cost you hundreds if not thousands over the life of your car loan.
Maintaining a positive credit score can alleviate this car finance problem. There are things you can do reasonably quickly to increase your credit rating. Do what you can to learn how to repair your credit and increase your credit score.
The next reason for car finance problems is what they call a negative equity car loan. Another term you may hear is an upside down car loan. This means that the balance due on the loan is greater than the value of the vehicle. These types of auto finance problems can feel like a black hole with no way out.
In these times, upside down loans are common and typically come from the longer loan terms and quick depreciation of a vehicle. A possible way out of this type of auto finance problem is a savings account. Do all you can to set some money aside in a savings account to help cushion the difference between what you owe on the car and its current value. You can also make extra payments every month on your loan to help off set your negative equity.
Another one of the car finance problems is the insurance premiums. If you have an auto loan you will be required to have the car covered by full insurance. If you have a poor credit rating you will most likely be charged higher insurance premiums.
Insurance companies pull your credit report and charge you more for insurance if you have bad credit. This is because reports show that people with poor credit ratings report more accidents than those with higher credit scores.
Another problem comes from making late payments on your auto loan. Being late on a payment can lower your credit score by 80 to 120 points. Having late car payments on your credit history can make it more difficult to buy another car when you need one. If you are overwhelmed with car finance troubles you may begin falling behind on the payments. This could cause the bank to repossess your vehicle leaving you with no wheels and a black mark on your credit report.
Address these problems as soon as they come up in your life so they don't get out of hand and cause you more headache and problems in the future.
By Mike Reitz
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